Proposition
13, best law for homeowner stability
Whatever you
hear about proposition 13, the one thing that can’t be argued is that it is one
of the greatest protections for property owners in California that has ever
been passed. Over 35 years ago, June 6th 1978 nearly two-thirds of
California’s voters passed Proposition 13, reducing property tax rates on
homes, businesses, and farms by about 57%. Now, according to the newly amended
state constitution property tax rates could not exceed 1 percent of the
property’s market value and valuations couldn’t grow by more than 2% per annum
unless the property was sold.
In addition,
Proposition 13 required that all state tax rate increases be approved by a
two-thirds vote of the legislature and that local tax rates also have to be
approved by a vote of the people. The people’s right to vote on taxes is a key
taxpayer protection. Being that I am in the business of Property Management in
Orange County Ca. I am a big supporter of homeowners.
Before Prop.
13 the people of California had no control over their tax bill. If a home
around the corner sold for a much higher price than all the other homes in the
area, then all the homes were reassessed at the higher homes value. Many people
especially older retired California residence were forced to sell their homes,
because they just could not afford their new property tax bill.
Proposition
13 gets blamed for every ill that ever happens to California, the proponents of
higher taxes have always hated Proposition 13. They say it’s not fair to
current home buyers to pay more in property taxes then the people who have
owned properties for years. But that
does not take in consideration that the people who have lived in the home for
years have paid for the entire infrastructure that the new owners are now going
to take advantage of.
The biggest
myth is that only people who have owned their property for many years are
protected under prop. 13. That is just not the case, all homeowners in
California are protected under prop. 13
How it
works:
When you buy
a home, your tax bill is based on the price of your home. So if you buy a home
for $500,000 the tax rate will be 1% OR $5000.00 the next year’s assessed value
can only go up 2% or $10,000, your new assessed value will be at the most $510,000
and the property tax for the next year can be at most $5100.00. You can
calculate that for as many years down the road as you like and you will know
what your property tax liability will be 20 years down the line, no surprises.
Just think that without prop. 13 and you
bought that same house for $500,000.00 and the next year the house next door
sells for $550,000.00 and your assessed value goes up to $550,000.00 with a tax
of $5500.00 instead of the $5100.00 under prop.13. Then the next year the house
on the other side of you sells for $600,000.00 and your property assessment
goes up to $600,000.00, under the new assessment your tax bill will be $6000.00
instead of the tax bill under prop. 13 which would be $5202.00. This could
continue to happen year in and year out, you would not know how much your
tax would be and this also assumes that the tax rate would stay at 1%. Without
prop.13 that probably would not be the case.
Proposition
13 is under constant attack from politicians who are always looking for ways to
redistribute wealth. With the unfunded pension and healthcare liabilities for
teachers and state workers well over $100 billion and no way to pay for these liabilities,
believe me those politicians will be salivating to cut into the protections of
prop.13.
One of the great things about being in
Property Management in Orange County California is that I get to explain to
people all the time, the virtues of Prop, 13. Prop.13 is a modern day tea party for home
owners and should be protected at all costs. Your home should not be put at
risk due to out of control spending from the political class. Prop, 13 give
stability to all California homeowners.